Cisco CEO Names Potential Post-Retirement Successors

John Chambers has been CEO at Cisco Systems Inc. since 1995, among the longest tenures in the quick-shifting technology industry, and his remarks on succession underscore new openness to change at the top of the company. Photographer: Victor J. Blue/Bloomberg

Sept. 26 (Bloomberg) -- Cisco Systems Inc. Chief Executive
Officer John Chambers identified some of the senior managers
that he and the board are considering as possible successors
when he retires, a move that could come in two to four years.

There are as many as 10 candidates, and directors review
the list quarterly, Chambers said in an interview yesterday at
Bloomberg’s headquarters in New York. They include Gary Moore,
chief operating officer; Robert Lloyd, executive vice president
of worldwide operations; Chuck Robbins, senior vice president of
the Americas; and Edzard Overbeek, senior vice president of
global services.

Chambers has been CEO at Cisco since 1995, one of the
longest tenures in the quickly shifting technology industry, and
his remarks on succession underscore new openness to change at
the top of the company. Chambers, 63, navigated Cisco through a
rise that briefly made it the world’s most valuable company. He
also guided it through the dot-com bust, the recent economic
crisis and the advent of a fresh crop of competitors.

“You begin to look at how these transitions occur, and the
job of the board and myself is to make sure this next one goes
really smooth,” Chambers said. “Assuming the board wants me
to, and assuming the shareholders do, I’ll stay on as chairman
after that.”

Chambers ordered a management overhaul last year to stem
profit-margin erosion and win back business lost to such
competitors as Juniper Networks Inc. and Hewlett-Packard Co.
Chambers said leadership changes are helping Cisco, the biggest
maker of routers and switches that shuffle data traffic, prepare
for a new CEO.

‘More Responsibility’

“You’re going to see me move our players around to get
more responsibility,” Chambers said. “You’ll see us increase
that overall. I can no longer bring up my leaders in silos.”

Chambers cited as an example the engineering
responsibilities given to Nick Adamo, senior vice president in
charge of global architectures and segments.

Moore, who joined Cisco in 2001 and became COO last year,
would lead the company if the CEO was suddenly unable to
continue his duties, in what Chambers described as the “hit by
the bus” scenario. The next chief will probably come from
within the company, Chambers said.

Culture and salary have helped the San Jose, California-based company retain executives even as competitors try to lure
them away with compensation as high as five times what they get
at Cisco, the executive said.

Executive Exits

Even so, some top managers have exited in recent years. Ned
Hooper, formerly chief strategy officer, left earlier this year
to form an investment-partnership company. Susan Bostrom,
previously chief marketing officer, departed last year. Charlie
Giancarlo, the former No. 2 to Chambers, left in 2008 to join
Silver Lake Partners. Jayshree Ullal, Mike Volpi and Tony Bates,
who were all senior vice presidents, also departed in recent
years, as did Hooper’s second in command, Charles Carmel, who
left last year for Warburg Pincus LLC.

In some cases, the departures reflected dismay with a
management structure that investors and former employees said
slowed decision-making and contributed to market-share losses.
Chambers took steps last year to dismantle the system.

Cisco shares slipped less than 1 percent to $18.58 at the
close in New York. The stock has gained 2.7 percent this year.

Whitman, Acquisitions

Asked about the challenges facing Hewlett-Packard, which is
struggling to reverse a slump that has cut revenue for four
straight quarters, Chambers said that reviving the Silicon
Valley icon is a “hard hand to play.” He said he would have
advised Meg Whitman, CEO since last year, not to take the job.

“I like Meg Whitman a lot,” Chambers said. “She’s doing
this purely out of the goodness of her heart, and I would have
told her not to.”

Chambers also said Cisco plans to make small acquisitions
to expand in areas such as video, collaboration, virtual data
centers, mobility and security. The company said today that it
acquired ThinkSmart Technologies, an Irish software company that
delivers location data analysis using Wi-Fi technology. Terms
weren’t disclosed.

Cisco won’t make large purchases of companies such as
Citrix Systems Inc. or Red Hat Inc., which Chambers said were
too expensive. In storage, “we’re much more interested in
partnering” than doing acquisitions, he said.

“If you watch where the network is growing -- with almost
all the major technology trends, with big data, to mobility, to
PCs going to tablets, to the Internet of everything, software-defined data centers -- we’re right in the center of almost
every major transition,” Chambers said today in an interview on
Bloomberg Television’s “In the Loop with Betty Liu.”